PHILIPPINE SHARES dropped on Monday due to concerns over the global financial sector after a US bank was shut down by regulators and ahead of the release of US consumer inflation data.

The benchmark Philippine Stock Exchange index (PSEi) declined by 45.43 points or 0.68% to end at 6,544.45 on Monday, while the broader all shares index went down by 21.56 points or 0.6% to close at 3,518.83.

“The PSEi ended in red with the financial sector leading the decline due to the meltdown of US-based Silicon Valley Bank (SVB). The event stirred up concerns regarding the global banking sector amid a rising rate environment, prompting investors to size up the situation against the 2008 financial crisis,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

“The market seems to have sold shares due to the SVB issue in the United Kingdom and the United States. Investors are also awaiting the announcement of the Fed if they will be aggressive… or just pause for now,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

California banking regulators closed Silicon Valley Bank on Friday and appointed the Federal Deposit Insurance Corp. as receiver for later disposition of its assets.

The collapse caused analysts to predict that the Fed would no longer hike rates in its March 21-22 meeting due to stress in the banking sector.

The US central bank hiked its target interest rate by 25 basis points (bps) at its Jan. 31 to Feb. 1 meeting to a range between 4.5% and 4.75%. Since March 2022, the Fed has raised rates by a total of 450 bps.

“Additionally, investors were anticipating the upcoming US CPI (consumer price index) report with apprehension, and this further contributed to the sell-off and foreign outflows that the market saw,” Mr. Temporal said.

February US consumer inflation data will be released on March 14.

US CPI increased 0.5% in January after gaining 0.1% in December. In the 12 months through January, consumer inflation increased to 6.4%.

Back home, almost all sectoral indices closed lower on Monday. Financials dropped by 37.39 points or 2.03% to 1,798.13; services declined by 33.21 points or 2.02% to 1,610.62; industrials went down by 70.80 points or 0.73% to 9,511.79; and property fell by 1.82 points or 0.06% to 2,794.73.

Meanwhile, holding firms gained 27.64 points or 0.44% to end at 6,299.98; and mining and oil went up by 0.76 point to 10,697.46. 

Value turnover surged to P25.53 billion on Monday with 913.52 million shares changing hands from the P8.77 billion with 798.74 million issues traded on Friday. 

Decliners outnumbered advancers, 124 versus 58, while 47 names closed unchanged.

Net foreign selling jumped to P21.15 billion on Monday from P142.67 million on Friday.

Mercantile Securities’ Mr. See put the PSEi’s support at 6,533 and 6,657; and resistance at 6,763, 6,800, and 7,000. — Ashley Erika O. Jose